Why Post is a Buy

Post Holdings, which has been a lousy performer over the last few years, has the chance to soar again now that it has split from Ralcorp Holdings, “Mad Money” host Jim Cramer said Monday.

“Now that Post is its own company, all the problems that held it back under Ralcorp can now be corrected,” he said, “and I think the stock has a whole lot more room to run.”

Cramer thinks Post, which makes cereals like Honey Bunches of Oats, Shredded Wheat and Raisin Bran, can turn itself around because its new management seems to understand the problems and what it’ll take to fix them.

The St. Louis, Mo.-based company has already decided to increase its advertising and promotion budget and invest heavily in innovation.

Despite its 7 percent gain Monday, Cramer still believes it is not too expensive in the world of cereal.

“It could take some time for Post to turn things around, and I think the stock could drop back a bit because it rallied [Monday] for no particular reason,” he said, “but you want to be in this one before the earnings turn happens.”